Weitz Commercial - 150 Lake Street S; Ste 216 - Kirkland, WA - (206) 306-4034

Tuesday, May 31, 2011

National Real Estate continues slide - Seattle Real Estate up (barely)

WASHINGTON (AP) -- Home prices in major areas have reached their lowest level since the housing bubble burst in 2006, driven down by foreclosures, a glut of unsold homes and the reluctance or inability of many to buy.

Weitz - sorry about the picture to the right - I couldn't resist for this article.

Prices fell from February to March in 18 of the metro areas tracked by the Standard & Poor's/Case-Shiller 20-city index. And prices in a dozen markets have reached their lowest points since the housing crisis began. Prices in March rose only in the Seattle and Washington, D.C., metro areas.

Weitz - this was interesting that Seattle had a rise in March - it should be noted that the 'rise' was .1% and March numbers were down 7.5% from this time last year. I don't expect notable rises for the indefinite future.

The nationwide index fell for the eighth straight month.

A record number of foreclosures are forcing prices down, and they are expected to keep falling through this year.

The 12 cities now at their lowest levels in nearly four years are: Atlanta, Charlotte, Chicago, Cleveland, Detroit, Las Vegas, Miami, Minneapolis, New York, Phoenix, Portland, Ore., and Tampa.

The Case-Shiller index measures sales of select homes in those cities compared with January 2000. For each of the areas it reviews, the index provides a three-month moving average price. By measuring the sales prices of the same homes over time, the index seeks to gauge market values and conditions.

The housing sector is struggling even as the overall economy is in the midst of a steady but slow recovery. Some of the worst declines in home prices are in cities hit hardest by unemployment and foreclosures, such as Phoenix, Tampa and Las Vegas.

They are flooded with homes sitting vacant, awaiting buyers. Many banks have agreed to allow homes at risk of foreclosure to be sold for less than what is owed on their mortgages. That trend has pulled down prices further.

Coastal areas, such as San Francisco, San Diego, Los Angeles, Washington and Boston, have fared comparatively better in the past two years. They have been aided by healthy local economies and low unemployment, desirable city centers and limited space for new housing.

But the damage is now spreading to areas that had long escaped the worst of the crisis. They include once-thriving markets, such as Dallas, Denver, Minneapolis and Cleveland. Economists regard them as housing bellwethers -- metro areas that are reliable indicators of where national prices are headed.

Denver and Dallas are on pace to hit post-housing bust lows in the next few months.

In the seven years before its peak in July 2006, the home-price index surged 155 percent. Since then, it's fallen 33 percent.

"We look for further declines to be registered in the quarters ahead," said Joshua Shapiro, chief U.S. economist at MFR Inc.

Weitz - not a big surprise - the government is calling it a 'double dip' - I would argue that we never really had a recovery in housing outside of faux government tax credit that brought demand forward and made things look more heathly than they truly were for a brief period of time.

For more information on your rights in Short Sale, or Foreclosure, consider contacting a Seattle Short Sale Attorney.

Our Firm:

Weitz Law Firm, PLLC
520 Kirkland Way, Ste 103
Kirkland, WA 98033
(425) 889-9300


Saturday, May 14, 2011

Mortgage Insiders cry foul

A clip from the Dylan Ratigan show on industry insiders 'blowing the whistler' on the foreclosure process.

Visit msnbc.com for breaking news, world news, and news about the economy

Tuesday, May 10, 2011

Home Market takes a tumble

Weitz – If you follow our blog regularly, this is old news. Nevertheless, a recent report regarding the continued falling of housing prices:

WSJ - Home values posted the largest decline in the first quarter since late 2008, prompting many economists to push back their estimates of when the housing market will hit a bottom.

Home values fell 3% in the first quarter from the previous quarter and 1.1% in March from the previous month, pushed down by an abundance of foreclosed homes on the market, according to data to be released Monday by real-estate website Zillow.com. Prices have now fallen for 57 consecutive months, according to Zillow.

Last year, the housing market showed signs of improving as price depreciation slowed in some markets and stabilized in others. In response, a number of economists began forecasting that housing would hit a bottom in late 2011, then begin to recover. But the improvements, spurred by federal programs that gave buyers up to $8,000 in tax credits, proved fleeting. Sales collapsed when the credits expired last summer, and prices in many markets have been falling ever since.

While most economists expected sales to decline after tax credits expired, the drag on the market has been greater than many anticipated. "We expected December and January to be bad" as the market reeled from the after-effects of the tax credit, said Stan Humphries, Zillow's chief economist. But monthly declines for February and March were "really staggering," he said. They indicate "a reflection of the true underlying demand, which is now apparent because most of the tax credit is out of the system, and it's being completely overwhelmed by supply."

Mr. Humphries now believes prices won't hit bottom before next year and expects they will fall by another 7% to 9%. Other economists revised their forecasts. In April, the chief economist at mortgage company Fannie Mae, Doug Duncan, said home prices in the second quarter would be 5.3% lower than the previous-year period, down from his earlier estimate of a 2.6% decline.

An abundance of foreclosed homes on the market is pushing down home values.
The estimates, which are based on data from the mid-1990s on, come from a proprietary computer program that takes into account sale prices for nearby homes that appear comparable, the size and other physical attributes of the home, its sales history and tax-assessment data, Mr. Humphries says.

Prices are decelerating in large part because the many foreclosed properties that often sell at a discount force other sellers to lower their prices. Mortgage companies Fannie Mae and Freddie Mac have sold more than 94,000 foreclosed homes during the first quarter, a new high that represented a 23% increase from the previous quarter. More could be on the way: They held another 218,000 properties at the end of March, a 33% increase from a year ago.

The companies are bracing for more bad news: On Friday, Fannie reported a $6.5 billion net loss, largely as it boosted loan-loss reserves in anticipation of falling home prices.

Paul Dales, a senior U.S. economist with Capital Economics, says prices could fall by as much as 10%, down from his previous forecasts of around 5%. A March survey of more than 100 economists by MacroMarkets LLC forecasts a 1.4% drop in prices this year, down from the December estimate of a 0.2% decline.

Other home-price indexes also show weakness. The widely followed Case-Shiller index published by Standard & Poor's showed that prices climbed from April 2009 until last summer, when they started declining as tax credits expired. Today, prices are on the verge of reaching new lows, the index shows. The Case-Shiller index tracks repeat sales of previously owned homes using a three-month moving average.

According to the Zillow index, a handful of California markets and Washington, D.C., saw price appreciation last year, but that has since reversed. Mr. Humphries attributes the "double dip" in those markets, which include Los Angeles, San Francisco and San Diego, to the way in which the tax credit stimulated demand from buyers. When the tax credit went away, markets were left with rising supply from foreclosures but with less demand from buyers.

Weitz- creating false demand for a product or asset never ends well. I don't recall the amount of wasted taxpayer dollars that went into the tax credit, but I know it was a rather large. Obviously, it created a short term increse in demand that brought forward future demand, and now we're in a period where the demand is likely lower than it should/could be as our policies encouraged many who would be looking at purchasing now to purchase during the tax credit.

Detroit, Chicago and Minneapolis posted the largest declines during the first quarter of the top 25 metro areas tracked by Zillow, while Pittsburgh, Dallas and Washington posted the smallest declines.

To be sure, steep declines in home prices along with mortgage rates near their lowest levels in decades have helped make housing more affordable than at any time in the past 30 years, according to Zillow. Markets that have lower levels of foreclosures, such as Dallas, and those with better job-growth prospects, such as Washington, are faring better.

However, credit standards remain tight, posing another challenge for the housing market. Just as many unqualified borrowers received loans during the boom, "there are people today who probably could afford loans but can't get them," says David Berson, chief economist at PMI Group Inc. The average credit score on loans backed by Fannie Mae stood at 762 in the first quarter, up from an average of 718 for the 2001-2004 period.

Weitz - Average credit of 762; that is awefully high for an 'average'.
Joe Sullivan, a real-estate agent in Stockton, Calif., is worried that more traditional buyers are seeing their loan applications canceled late in the process as lenders change qualification terms. If mortgage standards continue tightening, prices are "going to drop down to where only investors can get them, people with cash money," he said. Sales to absentee buyers, primarily investors, accounted for 47% of all Phoenix-area home sales in March, the highest level for any month in more than a decade, according to DataQuick, a real-estate research firm.

Christine Rice spent two years looking to buy a home in Los Angeles but found herself continually losing out to bids from investors offering to pay in cash. In September, she finally made a winning bid, paying $275,000 for a two-bedroom home.

The prospect of falling prices "doesn't keep me up at night, but only because it was so cheap," says the 43-year-old tailor, who says she and her husband needed to move to have more space for their family. Her mortgage payments plus taxes are less than the rent she had been paying. "If it had been a stretch, then maybe I'd be worried," she says.

Buyers who qualify for mortgages are demanding bigger discounts as added insurance against further declines in values. Sellers, meanwhile, are balking. "More often, they don't want to take the first offer," says Jeffrey Otteau, president of Otteau Valuation Group, an East Brunswick, N.J., appraisal firm. "What they don't realize is, in an oversupplied market, the next offer is for less."

While some analysts have argued that home prices need to fall to "clearing prices" that will attract more buyers, price declines could also complicate any recovery by pushing more borrowers under water. Zillow estimates that more than 28% of borrowers owe more than their homes are worth nationally. Those numbers are much higher in hard-hit markets such as Phoenix, where more than two-thirds of borrowers owe more than their homes are worth.

Saturday, May 7, 2011

Fannie Bleeds anew as Housing Falters

Tucked in the corner of the Wall Street Journal is a very concerning story...

AP- Fannie Mae reported a net loss of $6.5 BILLION for the first quarter as a weakening housing market dashed hoped that the company had stabilized.

Fannie said Friday it would ASK THE GOVERNMENT FOR a fresh TAXPAYER infusion of $6.2 billion after paying dividends to the Treasury. The loss follows net income of $73 million during the previous quarter.

Fannie's loss as it increased its loan loss reserves after it REVISED DOWN ITS HOME PRICE FORECAST for 2011, and took bigger than expected losses on the sale of foreclosed properties. The mortgage finance giant booked $11 Billion in credit related expenses, up from $4.3 billion last quarter.

"Right now, we're not seeing a lot of good thing in the residential real estate markets," said David Hisey, acting chief financial officer for Fannie Mae.

Home prices declines pose a big risk to Fannie and its smaller sibling Freddie Mac because the firms could take steeper losses on a rising number of foreclosed homes that must be resold. Fannie and Freddie owned 218,000 homes at the end of March, a 33% increase from a year ago.

Weitz - did you catch that?...they own 218,000 homes - there is that shadow inventory I always about. This is a problem that will be a drag on the market for years.

The rising losses came despite a decline in the share of single family loans that were 90 days or more delinquent. Those fell to 4.27% at the end of the March, down from 4,48% at the end of last year. Fannie had around $206 billion in delinquent loans on its books, "so with that much exposure, if you just have a little bit of negative things happening, it can have a big impact," said Mr. Hisey.

Fannie's report comes days after Freddie Mac reported net income of $676 million for the first quarter.

It is clearly too soon to say that they've turned a corner," said Jim Vogel, an analyst at FTN Financial.

The federal government has committed unlimited sums to prop the companies unlimited sums sums to prop the companies up and keep mortgage markets from collapsing. So far, taxpayers are on the hook for around $138 billion, with $86 billion for Fannie and $52 billion for Freddie.

The government receives preferred shares that pay a 10% dividend in exchange. At the current rate, Fannie must pay the government $2.3 billion each quarter. Fannie has posed losses for 14 of the past 15 quarters.

Weitz - the lunacy of Freddie of Frannie is mind-boggling. I have a few thoughts on the issue that you won't hear in most media:

1) All this talk by Congress about repealing Fannie and Freddie is insincere and they know it. Simply put, there is no way that the government can do away with Fannie and Freddie as they guarantee over 90% of all new loans issued on residential mortgages. Without this guarantee, the mortgage market would unquestionably collapse.

2) Fannie and Freddie have implicitly bailed out the banks (in addition to the other government programs like TARP, TALF, etc.) This essentially has put the losses faced by the banks on the shoulders of taxpayers as we are ultimately responsible for all these losses as they continue to incur quarter after quarter.

3) Please explain to me how this 'dividend' paid back to treasury makes sense. Let me get this straight, Fannie and Freddie pays the Treasury a dividend and then the Treasury turns around and writes a check to keep Fannie and Freddie alive. Skeptically, I think it allows them to 'tweak' their books for accounting purposes.

3) As I've said before- our government officials need to pick either pure capitalism or pure socialism. This quasi- capitalist system we have favors a hand few of those in elite positions while everyone else suffers. If we want to be a true capitalist society, we have to let Fannie and Freddie fail and let the system reset.

For more information on your options in Real Estate, Bankruptcy and Tax, consider contacting a Seattle Foreclosure Attorney.

Our Firm:

Weitz Law Firm, PLLC
520 Kirkland Ave
Kirkland, WA 98033
(425) 889-9300


Tuesday, May 3, 2011

Celebrity Foreclosure

A growing number of high-end homes are selling at a loss or facing repossession by lenders in Las Vegas, which already has the highest rate of foreclosure filings among large U.S. cities. The wave of defaults that began with subprime borrowers and the unemployed has spread to upscale homeowners who see no point of staying even if they can afford to.

Actor Nicolas Cage bought a home in Las Vegas, Nev., in 2006 for $8.5 million. By 2010, it was in foreclosure.

Nicolas Cage, the Oscar-winning star of "Leaving Las Vegas," bought a seven-bedroom home with a panoramic view of the city's casino-lined Strip in 2006 for $8.5 million. By January 2010, it was in foreclosure.

The next owner, who property records show paid $4.2 million, has put the house on the market for $7.9 million — an "unrealistic" price, according to Zar Zanganeh, the broker handling the listing.

"It's sad," Zanganeh said, his high-heeled boots clacking on the marble floor as he gave a tour of the 14,000-square-foot mansion featuring a six-person steam shower and a closet the size of a small apartment. "There's a lot of inventory, a lot of homes like this waiting for an owner."

A growing number of high-end homes are selling at a loss or facing repossession by lenders in Las Vegas, which already has the highest rate of foreclosure filings among large U.S. cities. The wave of defaults that began with subprime borrowers and the unemployed has spread to upscale homeowners who see no point in staying even if they can afford to.

In the 15 months through March, at least 25 houses in the Las Vegas area changed hands for more than $3 million, with at least seven doing so through foreclosure or by selling at a loss, according to the Greater Las Vegas Association of Realtors and Clark County property records. In 2009, 14 homes sold for more than that amount, with one trading at a loss.

In the first quarter, 30 Clark County homes with loans exceeding $1 million were repossessed by banks or bought by third-parties in foreclosure sales, up from 20 homes a year earlier, according to ForeclosureRadar.com, a Discovery Bay, Calif., company that tracks defaults. Short sales, in which the bank agrees to accept less than the loan balance, and bank-owned properties accounted for about three-quarters of all home sales, according to the Las Vegas Realtors.

"You feel like a sucker if you're paying a $5 million mortgage on a house that's worth $2 million," said Zanganeh while showing the grounds of an 11-acre Las Vegas estate built by Prince Jefri Bolkiah, brother of the Sultan of Brunei. "These days, there are no traditional sales. They're all short sales or bank-owned."

The estate — with 18 bedrooms, 36 bathrooms, a 20,000-bottle wine cellar, an 11-car garage and air-conditioned stables for 10 horses — sold for $14 million in 2004 to Eric Petersen, who owned Consumer Credit Services, a Las Vegas-based catalog-merchandising company that closed in 2008. Petersen said he spent $20 million to make it habitable.

It's back on the block for $25 million — $9 million less than his investment — with an offer "for considerably less on the table," Petersen said. He has slashed the listing price four times since October from an initial $37.5 million.

"I gave up on Vegas," Petersen said.

Another listing with Zanganeh's firm, Luxe Estates Collection, is a never-occupied, bank-owned mansion overlooking a Jack Nicklaus-designed golf course in the gated Ridges community west of Las Vegas. The asking price is $3 million for the 8,550-square-foot house, which was repossessed in 2010 and had a $3.2 million mortgage from the Community Bank of Nevada, a lender seized by regulators in August 2009.

About 100 homes in the county are listed for $3 million or more, according to the Las Vegas Realtors, a five-year supply at the current sales pace.

Strategic defaults

In Nevada, 23 percent of delinquent borrowers said they "strategically defaulted," or walked away from their homes by choice rather than necessity, according to a January report by the Nevada Association of Realtors.

"It's folks that feel the hopelessness of it all," Rob Wigton, chief executive officer of the state association, said in a telephone interview from Reno. "They've rolled the dice and lost."

The population of Clark County, home of Las Vegas, has fallen by about 16,000 from its estimated high of 1.97 million in 2008, according to the Nevada State Demographer. Almost 15 percent of homes in the county — 125,000 residences — were vacant, according to the 2010 Census, after a construction boom in the last decade that peaked with 39,000 housing permits issued in 2005.

Las Vegas home values plunged 58 percent from the 2006 high-water mark through February, the biggest drop of the 20 metropolitan areas tracked by the S&P/Case-Shiller index, and are the lowest since June 1999, the group said last week. Prices fell 7.4 percent in March from a year earlier to a median $125,950, the Las Vegas Realtors reported April 8.

Almost 70 percent of Las Vegas-area homeowners with mortgages were underwater at the end of 2010, meaning they owed more than the value of the property, according to CoreLogic, a Santa Ana, Calif., real-estate information company. Among cities with a population of more than 200,000, Las Vegas has led the nation in the pace of foreclosure actions since November 2009, with one of every 31 homes receiving a filing in the first quarter of this year, RealtyTrac, an information provider in Irvine, Calif., reported April 14.

About 20 percent of Las Vegas homeowners seeking short sales owe at least $750,000, said Jamie Cogburn, a Las Vegas plaintiff's attorney who said he has handled 350 such sales and is working on 200 more. One client is a doctor with a home now valued at about half of its $1 million mortgage, Cogburn said. The doctor earns enough to save for a 20 percent down payment on his next home within a few months at current prices.

"People with a higher income can go buy another house," Cogburn said. "You've got to cut your losses at some point, just like with a stock."

Cage, who won an Academy Award for 1995's "Leaving Las Vegas," in which he portrays an alcoholic who drinks himself to death in the city, stayed in the house now being marketed by Zanganeh for four weekends, according to the broker.

Actor's troubles

The actor sued his manager in October 2009 for placing him in "numerous highly speculative and risky real-estate investments, resulting in Cage suffering catastrophic losses," according to court filings.

The manager, Samuel Levin, countersued, saying Cage ignored advice and "set off on a spending binge of epic proportions," acquiring 15 homes, four yachts, an island in the Bahamas, a Gulfstream jet and millions of dollars of jewelry and art, according to a November 2009 complaint in state court in Los Angeles County. The case was settled out of court in August.

Cage "is working and not doing press at this time," his publicist, Samantha Hill, said in an email. He was arrested in New Orleans on April 16 for domestic abuse and public drunkenness, according to a statement by the city's police department.

Las Vegas's economic collapse has made it hard for many executives and business owners who own mansions to keep up with their mortgages, said Brian Gordon, a partner at Applied Analysis, an economic-consulting firm in the city.

"People on the lower end were forced out a long time ago," he said. "People on the high end had a longer staying power. Now they've chewed through their resources."

While high-end homes fall in price, total residential- property sales have accelerated, rising 8.2 percent in March from a year earlier to 4,316 units, the Las Vegas Realtors reported. More than half of this year's purchases were all-cash transactions, a sign that investors are finding bargains at the low end of the market, said Robert Lang, a professor of sociology at the University of Nevada, Las Vegas.

"Prices are below the cost of materials and labor," said Lang, also a senior fellow at the Brookings Institution in Washington, D.C. "If you're betting the U.S. economy won't go back to Armageddon, you might see one-third appreciation if you buy now."

Las Vegas's affordable housing and warm weather will be the theme of a promotional campaign the city plans to use to attract out-of-town investors and potential new residents, Mayor Oscar Goodman said.

"We're going to make lemonade out of this 'crisis' by promoting our foreclosures here," Goodman said.

The city, he said, will be "showing the opportunities to people who are freezing to death in the middle of the country in the worst winter imaginable — that they can come out here and buy a home at one-third what it cost five years ago and have a wonderful quality of life."

Weitz - Viva Las Vegas - these numbers are extraordinary. It will be interesting to see if Seattle has similar stories in the next couple years.